Tuesday, August 25, 2009

Stop selling us packaging - we only want what's inside!

ECONOMIST.com: One strategy would be to sidestep retailers completely and sell directly to consumers through the internet. P&G’s new boss, Bob McDonald, has alluded to this sort of plan. It could be exactly the type of “game-changer” his company desperately needs.

SHOOT: What these brands need to do is quit selling packaging to consumers, and sell us the contents. That is, after all, what we're buying, not pretty pictures. The brands that make these deprecating moves will survive those who insist on selling packaging and frills that consumers can no longer afford.
clipped from www.economist.com

Earlier this month P&G reported profits of $2.5 billion, down 18% in the most recent quarter from a year earlier. Sales of its products—which include such brands as Bounty paper towels and Tide detergent—were down 11%. Analysts worry that it might take years for the company to restore its profits to their former levels.

For most packaged-goods firms, recent earnings reports were grim. Unilever, the world’s third-largest consumer-goods firm by sales, announced this month that profits in the second quarter were down 17% from a year ago. Kimberly-Clark, the maker of Kleenex tissues and Scott paper towels, Sara Lee, a manufacturer of frozen foods, and Colgate-Palmolive, with its eponymous toothpaste and soap, all saw revenues drop in the past quarter. Firms that specialise in food, including Nestlé, Kraft and Kellogg, are holding up better than those that sell products for cleaning and grooming, but only because consumers are preparing more meals at home.

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